Here at the agency I work for, a need has arisen for a subdomain that utilizes some unicode characters. It has something to do with our foreign clients getting "page could not be displayed" errors in their internationalized browsers. I am still investigating the issue, but I've been asked to find out if there is a way to support Unicode in DNS records. We currently are using OpenVMS + Multinet with a DNS server based off of 8.2.x. I imagine that product can't support Unicode and I've been wanting to moved those boxes to OpenBSD+BIND. In most of the searching I've done, the only DNS servers I see that do support Unicode are Windows DNS servers. I have no interest or desire to go that route unless there is absolutely no other way. Based on the entries in Microsoft's knowledgebase, it would appear that they've "extended" the functionality of their DNS servers beyond what is defined in the RFCs. So, again I'm guessing that there is no Unicode support in BIND, but I thought I'd ask the experts! So here I am... askin'. 
OK... I searched on Wikipedia and found this article on IDN (Internationalized Domain Names) and IDNA (Internationalized Domain Names in Applications). From what I can tell it sounds like the Unicode domain names are supported by the applications using ToASCII and ToUnicode algorithms within an application. So, a browser like Firefox would use these algorithms to convert a Unicode encoded URL to ASCII for query against standard DNS servers using Punycode (Pure ASCII representation of Unicode with some limitations). I *think* this might even work with our existing OpenVMS DNS servers, but I'll have to test it. See the article at Wikipedia for more information: IDNA
Heheh... I may have answered my own question again. 
I was able to make a DNS A record with the host in the xn--pginas-pta format and my browser could then hit a website like:
and it would just work.